Part 4 Trading Master Class

Participants in Option Markets

There are four key participants in option trading:

Buyers of Calls – Bullish traders.

Sellers of Calls (Writers) – Bearish or neutral traders, earning premium.

Buyers of Puts – Bearish traders.

Sellers of Puts (Writers) – Bullish or neutral traders, earning premium.

Each of these participants plays a role in keeping the options market liquid.

Option Pricing: The Greeks

Option pricing is not random—it is influenced by multiple factors, commonly represented by the Greeks:

Delta: Measures how much the option price changes when the underlying asset moves ₹1.

Gamma: Measures how much Delta itself changes when the underlying moves.

Theta: Measures time decay—how much the option loses value daily as expiration approaches.

Vega: Measures sensitivity to volatility changes.

Rho: Sensitivity to interest rate changes.

For traders, Theta and Vega are the most crucial, since time decay and volatility play massive roles in profits and losses.